RESULTS
DNB GROUP
FOURTH QUARTER
Rune Bjerke, CEO
Bjørn Erik Næss, CFO
02.02.2017
Major achievements in 2016
CET1 ratio requirement reached one year ahead of plan. CET1 ratio 16.0 per cent.
Leverage ratio 7.3 per cent, well above the upcoming requirement and peer ratios
Proposed dividend per share of NOK 5.70 – delivering on dividend policy
Double-digit ROE, 10.1 per cent, despite capital build-up, high impairment losses
and branch restructuring
2016 was a year of investing to meet the new future of banking
Vipps downloaded by 50 per cent of the Norwegian population. Introduction of
new product areas will contribute to profitability
2
CET1 ratio requirement reached one year ahead of plan



Strategic reduction in loans to large international corporates with low profitability contributed to the increase
in the CET1 ratio, but had a negative effect on net interest income
Strong profits despite high impairment losses in 2016, mainly in oil-related industries and shipping
2015 was positively affected by the change of pension scheme, approximately NOK 2.0 billion
Net interest income
CET1 capital ratio,
transitional rules
NOK million
Per cent
12.7
14.4
16.0
32 487
35 358
Pre-tax operating profit
before impairment
Profit for the period
NOK million
NOK million
34 110
34 096
28 689
30 830
24 772
20 617
2014
2015
2016
2014
2015
2016
2014
2015
2016
2014
19 251
2015
2016
3
Delivering on dividend policy



Proposed dividend of 49.8 per cent, NOK 5.70 per share
Return on equity affected by higher capital due to build-up of CET1 capital, and impairment losses above
the normalised level
Strict cost control – reduced underlying cost base
Return on equity 1)
Earnings per share
Per cent
Dividend per share
NOK
NOK
Cost/income ratio
Per cent
41.9
14.5
13.8
36.9
14.98
12.67
3.80
2015
1)
2)
2016
2014
40.9
11.46
10.1
2014
2)
2015
2016
2014
4.50
2015
5.70
2016
Return on equity is calculated on the assumption that additional Tier 1 capital is classified as a liability
The C/I ratio excluding non-recurring effects relating to the change of pension scheme was 40.5 per cent in 2015
2014
2015
2016
4
Underlying growth in loans of 2.1 per cent in 2016, in line
with ambition



Reduced volumes in the large corporate segment and growth in the personal customer and SME segments
Reduction in RWA due to capital efficiency measures, mainly in the large corporate segment
Underlying growth in deposits of 4.9 per cent. Ratio of deposits to loans above 60 per cent
Loans 1)
NOK billion
1 543
1 531
1 439
1 486
1 439
1 515
Deposits 1)
NOK billion
1 554
1 519
914
934
914
893
938
962
925
937
1 129
1 121
1 045
1 051
31.12.14 31.03.15 30.06.15 30.09.15 31.12.15 31.03.16 30.06.16 30.09.16 31.12.16
Loans at end of period
Loans adjusted for exchange rate movements
RWA, transitional rules
1)
31.12.14 31.03.15 30.06.15 30.09.15 31.12.15 31.03.16 30.06.16 30.09.16 31.12.16
Adjusted for short-term money market investments
Adjusted for short-term money market investments and exchange rate movements
Includes NOK 45 billion in loans and NOK 36 billion in deposits in the Baltics at end-December 2016, reclassified as held for sale in August 2016
5
Combined spreads slightly down


Higher money market rates in 4Q16 affected both lending and deposit spreads
Expecting combined spreads to increase from 1Q17
Per cent
2.17
1.32
(0.02)
2Q15
2.13
2.11
2.07
2.08
2.03
1.32
1.32
1.35
1.33
1.30
1.29
0.24
0.18
0.19
0.25
0.08
0.12
3Q15
4Q15
1Q16
2Q16
3Q16
4Q16
1.96
Lending spread
Combined spread
- weighted average
Deposit spread
6
Positive profit trend in fourth quarter


Expecting positive trend in net interest income in 2017 due to wider spreads in all segments and reduced
funding costs
Higher activity in investment banking, lower impairment losses on loans and reduced taxes gave a rise in
return on equity compared with 3Q16
Net interest income
NOK million
9 062
8 481
8 372
Pre-tax operating profit
before impairment
9 262
Profit for the period
NOK million
15.0
NOK million
7 366
7 409
Return on equity 1)
Per cent
10.9
6 784
8.5
5 380
4 080
4Q15
3Q16
1)
4Q16
4Q15
3Q16
4Q16
4Q15
3Q16
Return on equity is calculated on the assumption that additional Tier 1 capital is classified as a liability
4Q16
4Q15
3Q16
4Q16
7
Strong profits before impairment losses
Personal customers
Small and medium-sized
enterprises
Large corporates and
international customers
NOK million
Reversals on
impairment losses
Impairment losses
2 474
4Q15
Loans
1)
Spreads 2)
2 503
3Q16
2 479
4Q16
2 006
927
883
1 047
4Q15
3Q16
4Q16
4Q15
1 521
1 628
3Q16
4Q16
696
707
718
220
227
232
579
554
531
1.34
1.22
1.19
1.49
1.55
1.54
1.24
1.29
1.29
1)
2)
Average loans to customers in NOK billion
Combined spread – weighted average, in per cent
Pre-tax operating
profit
8
Income statement
Full year
2016
34 110
Full year
2015
35 358
8 280
8 862
6 513
8 683
4Q16
3Q16
4Q15
8 372
2 136
8 481
2 016
9 062
2 082
Net gains on financial instruments at fair value
1 689
1 411
2 164
Net financial and risk result, DNB Livsforsikring
232
154
(681)
664
(389)
Net insurance result, DNB Forsikring
181
148
132
648
534
200
129
1 948
959
18 648
Amounts in NOK million
Net interest income
Net commissions and fees
Other operating income
(9)
4 230
3 929
3 825
18 053
Total income
12 602
12 409
12 888
52 163
54 006
Operating expenses
(5 213)
(5 042)
(5 437)
(20 693)
(21 068)
Net other operating income, total
Restructuring costs and non-recurring effects
Pre-tax operating profit before impairment
Net gains on fixed and intangible assets
Impairment of loans and guarantees
Pre-tax operating profit
Tax expense
19
7 409
(12)
(1)
7 366
20
1 811
9 262
(9)
(639)
30 830
(19)
1 157
34 096
45
(1 753)
(2 176)
(1 420)
(7 424)
(2 270)
5 644
5 209
7 833
23 387
31 871
(1 130)
(1 077)
(4 140)
(7 048)
(290)
26
1
28
4
Profit for the period
5 380
4 080
6 784
19 251
24 772
Profit attributable to shareholders
5 143
3 952
6 658
18 656
24 398
Profit from operations held for sale, after taxes
(51)
Transfer of risk equalisation
fund to policyholders’
premium reserve in 4Q15
One-off effect from Visa
transaction in 2Q16
Cost reductions due to
restructuring initiatives.
Non-recurring effects
stemming from change of
pension scheme in 4Q15
Impairment mainly in oilrelated industries and
shipping
Tax rate of 18 per cent
9
Commissions and fees on the rise


Investments in new products affect commissions and fees in the short term
Reduction year-by-year, but positive trend in 4Q16
NOK million
2 073 1)
2 016
2 136
Real estate broking
Development in line with the real estate market
Investment banking services
High activity in 4Q16, especially in ECM and M&A
Asset management and custodial services
Sound portfolio management gave high performance
fees in Asset Management
Money transfer and banking services
Affected by digitalisation, reduced interchange fees
and seasonal fluctuations
4Q15
1)
3Q16
4Q16
The figures for 4Q15 are adjusted for income from public sector activities within life
insurance that were in the process of being wound up
Sale of insurance products
Negatively affected by conversion from defined benefit
to defined-contribution schemes
10
Net gains on financial instruments
Amounts in NOK million
Customer revenues in DNB Markets
Trading revenues in DNB Markets
(excl. CVA/DVA/FVA and credit spread effects)
Credit spread effects on bonds in DNB Markets
Financial guarantees
Basis swaps
CVA/DVA/FVA
Additional Tier 1 capital
Other mark-to-market adjustments
Net gains on financial instruments at fair value
4Q16
631
3Q16
583
4Q15
628
Change
Change
3Q164Q15- Full year Full year
20154Q16
4Q16
2016
2015
2016
48
3
2 441
2 331
110
790
(24)
103
(713)
321
794
(214)
1 689
639
296
187
(444)
328
(282)
104
1 411
782
(235)
187
(4)
367
212
227
2 164
150
(320)
(84)
(270)
(6)
1 076
(317)
277
8
211
(84)
(709)
(45)
582
(440)
(475)
2 563
225
595
(542)
22
195
1 014
6 513
2 207
(809)
876
2 685
181
695
518
8 682
356
1 034
(281)
(3 227)
(158)
(500)
497
(2 169)
11
Changes in net interest income
From 3Q16 to 4Q16
NOK million
8 481
55
12
(16)
(44)
(116)
8 372
3Q16
1)
Equity and
non-interest
bearing items
Other
net interest
income
Customer segments, adjusted for exchange rate effects
Exchange
rate
effects
Lending and
deposit
1)
volumes
Lending and
deposit
spreads 1)
4Q16
12
Changes in net other operating income
From 3Q16 to 4Q16
NOK million
548
120
79
(46)
(130)
(270)
4 230
3 929
3Q16
Net gains
on other
financial instruments
Net
commissions
and fees
Net financial and
risk result from
DNB Livsforsikring
Other
operating
income
Net gains on the
sale of loans
Basis
swaps
4Q16
13
Delivering on cost ambitions
Full year
Amounts in NOK million
Total adjusted operating expenses
Full year
2016
Change
2015
(20 693)
374
(21 068)
Expenses directly related to operations
Pension expenses
(65)
Salaries and other personnel expenses
(excl. pension and restructuring costs)
Financial activities tax
196
(142)
IT expenses
Other costs
Non-recurring effects
(639)
(1 797)
Restructuring costs
(857)
(377)
Other non-recurring effects
IT restructuring
Operating expenses
117
268
218
0
(21 333)
(1 654)
234
(1 423)
1 157
(480)
1 871
(234)
(19 910)
Of which :
Exchange rate effects for units outside Norway
Currency-adjusted operating expenses
(104)
(20 590)
478
(21 068)
14
Impairment losses are estimated to be up to
NOK 18 billion over the period 2016-2018
Full year Full year
Amounts in NOK million
Personal customers
4Q16
3Q16
4Q15
2016
2015
77
(75)
24
329
942
- Mortgage loans
(4)
(8)
116
490
223
- Other exposure
81
(67)
(92)
(161)
719
(307)
(320)
(341)
(1 040)
(1 062)
(1 350)
(1 186)
(686)
(4 569)
(1 895)
- Shipping, Offshore and Logistics Division
(844)
(710)
(382)
(2 988)
(1 305)
- Energy Division
(238)
(348)
(173)
(1 126)
(317)
- Other units
(268)
(127)
(130)
(456)
(273)
(1 580)
(1 580)
(1 002)
(5 280)
(2 015)
(172)
(596)
(418)
(2 144)
(255)
(1 753)
(2 176)
(1 420)
(7 424)
(2 270)
(0.45)
(0.56)
(0.37)
(0.48)
(0.15)
Small and medium-sized enterprises
Large corporates and international customers
Total individual impairment
Total collective impairment of loans
Impairment of loans and guarantees
Total impairment in relation to average volumes, annualised 1)
1)
Excluding the sale of non-performing loan portfolios, the ratio was (0.52) for 2016 and (0.22) for 2015.
Affected by negative
migration and low
oil prices
15
The increase of non-performing and doubtful loans
mainly relates to the offshore portfolio
Per cent
1.38
1.32
1.19
NOK billion
0.96
0.83
0.78
0.77
0.76

0.88
20.7
25.7
22.6
20.7
17.3
31 Dec.
31 Dec.
2013
2014
13.9
13.1
13.6
14.0
31 March
30 June
30 Sept.
31 Dec.
2015
1.49
There are no signs of spillover effects from oil-related
industries
14.9
31 March
30 June
30 Sept.
31 Dec.
2016
Net non-performing and doubtful loans
As a percentage of net loans
Includes non-performing commitments and commitments subject to individual impairment. Accumulated individual
impairment is deducted.
Includes NOK 2.3 billion in the Baltics at end-December 2016, reclassified as assets held for sale in August 2016.
16
The negative migration in the offshore portfolio
continued
Offshore portfolio – EAD NOK 53 billion
2.8 per cent of DNB’s total EAD
45%
30
25%
Offshore portfolio =
NOK 53 billion
12
30%
8
3
Offshore supply vessels
Offshore rig
Other offshore
PD 0.01% -
31 Dec. 2015
EAD = Exposure at default
PD = Probability of default
PD 0.75% -
31 March 2016
PD 3.00% -
30 June 2016
Net non-performing
and net doubtful
commitments
30 Sept. 2016
31 Dec. 2016
17
Balance sheets
DNB Group
31 Dec.
2016
208
176
1 509
759
2 653
213
Amounts in NOK billion
Deposits with central banks
Due from credit institutions
Loans to customers
Other assets
Total assets
Due to credit institutions
Deposits from customers
Short-term debt securities issued
Long-term debt securities issued
Other liabilities and provisions
935
153
612
533
Additional Tier 1 capital
Other equity
Total liabilities and equity
31 Dec.
2015
19
301
1 543
735
2 599
162
944
160
645
497
16
190
2 653
2 599
1)
62.0
61.3
2 931
61.2
60.5
2 901
Currency-adjusted loans to customers
Currency-adjusted deposits from customers
Liquidity coverage ratio
1 531
951
138
Ratio of deposits to net loans (%)
Adjusted ratio of deposits to net loans (%)
Total combined assets
1)
Excluding short-term money market deposits
Net loans to customers decreased by
NOK 34 billion. The Baltic loan portfolio,
totalling NOK 45 billion as at Dec. 16,
was reclassified to assets held for sale.
Reclassification of the Baltic portfolio of
NOK 36 billion to liabilities held for sale
8
182
Stable high ratio of deposits to loans
Liquidity Coverage Ratio remained stable
at above 100 per cent throughout the
fourth quarter
18
Solid and well-positioned to meet future capital
requirements


The CET1 ratio met the capital requirement at year-end 2017, including increased Norwegian counter-cyclical
buffers, one year ahead of plan
Leverage ratio of 7.3 per cent – well above the upcoming requirement and peer ratios
14.4
31.12.
2015
CET1 capital ratio
DNB Group
Transitional rules
CET1 capital ratio
DNB Bank Group
Transitional rules
Per cent
Per cent
15.2
31.03.
2016
15.2
30.06.
2016
15.7
30.09.
2016
16.0
31.12.
2016
14.3
31.12.
2015
14.7
31.03.
2016
14.5
30.06.
2016
Leverage ratio
DNB Group
CET1 capital ratio
DNB Group
Basel III without transitional rules
Per cent
Per cent
15.0
30.09.
2016
15.7
31.12.
2016
16.0
31.12.
2015
17.0
31.03.
2016
16.5
30.06.
2016
17.2
30.09.
2016
17.6
31.12.
2016
6.7
6.7
6.8
6.9
7.3
31.12.
2015
31.03.
2016
30.06.
2016
30.09.
2016
31.12.
2016
All figures include 50 per cent of interim profits, apart from the figures as at 31 December, which are exclusive of dividend payments
19
CET1 ratio requirement reached one year ahead of plan
0.3
0.3
(0.2)
Exchange rate
effect on
existing portfolio
Currency-adjusted
growth in
loan portfolio
16.0
0.4
0.8
14.4
12.7
CET1
31.12.2014
CET1
31.12.2015
Earnings for the
period
adjusted for
dividends
New
regulatory
consolidation
Capital efficiency
initiatives
CET1
31.12.2016
20
Financial ambitions 2017-2019
ROE > 12 per cent
Overriding target
towards 2019
C/I ratio< 40 per cent
Key performance indicator
Nominal volume growth in loans to personal customers
and SMEs, but only a minor increase in total loans 2)
Expecting combined spreads to increase from 1Q17
About 3 per cent annual growth in commissions and
fees
CET1 ratio ~ 16.0 per cent 1)
Requirement including
management buffer
Dividend > 50 per cent
Impairment losses are estimated to be up to NOK 18
billion over the period 2016-2018, with the highest
impairment losses during the first part of the period
Cash dividend combined
with share buy-back
programme
Stable risk-weighted assets
2)
Tax rate: 23 per cent
1)
1)
2)
2)
Towards 2018
Based on transitional rules including increased counter-cyclical buffer requirements in Singapore, Sweden and Norway
Based on transitional rules
Adjusted for exchange rate movements
21
APPENDIX
22
DNB’s loan book is robust
– negative migration in the oil-related portfolio
Personal customers
Oil-related portfolio
Corporate customers
excl. oil-related portfolio
EAD in NOK billion
EAD in NOK billion
EAD in NOK billion
716
567
247
163
18
PD 0.01% -
PD 0.75% -
PD 3.00% -
EAD = Exposure at default
PD = Probability of default
59
3
Net nonperforming and
net doubtful
commitments
PD 0.01% -
PD 0.75% -
PD 3.00% -
12
Net nonperforming and
net doubtful
commitments
56
PD 0.01% -
22
PD 0.75% -
44
PD 3.00% -
16
Net nonperforming and
net doubtful
commitments
23
The negative migration in the oil-related portfolio
continued
•
Accumulated collective and individual
impairment losses for the oil-related
portfolio total approximately NOK 5
billion or 6.7 per cent of the total drawn
amount
Oil-related portfolio – EAD NOK 138 billion
7 per cent of DNB’s total EAD
Offshore
Oil and gas
E&P excl. RBL
18%
Downstream & petchem
3%
Oilfield services
Offshore supply vessels
17%
Midstream incl. LNG
14%
Reserved based lending
10%
Oilfield services
18%
EAD = Exposure at default
PD = Probability of default
Offshore rig
12%
Other offshore
10%
24
Changes in the common equity Tier 1 capital ratio
15.7
CET1
30.09.2016
0.3
Capital efficiency
initiatives
0.2
(0.1)
(0.2)
Earnings for the period
adjusted for dividends
Other effects
Net exchange rate
effect
16.0
CET1
31.12.2016
25
HERE FOR YOU.
EVERY DAY.
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